This document summarizes Tony Travers' discussion of regeneration and capital development in London and the Greater Southeast region under the current policy environment in the UK. Some of the key changes include the abolition of regional development agencies and a shift from grants to incentives. New policies like Enterprise Zones, Local Enterprise Partnerships, and Tax Increment Financing aim to spur growth through tax incentives. Local governments now face budget cuts but also opportunities to retain more business rates and home bonuses to become self-sufficient. Maximizing these new resources will require strengthening public-private partnerships and developing clear proposals.

1. TONY TRAVERS
DIRECTOR
GREATER LONDON GROUP LSE
,

2. Regeneration and capital
development in a cold climate
Tony Travers
London School of Economics

3. The policy environment
 Abolition of RDAs, GROs, etc
 inc LDA
 Move from ‘grants’ to ‘incentives’
 ‘Big Society’ and ‘localism’
 Shift of power downwards and to
neighbourhoods
 Greater SE councils faced with many
radical changes, esp budget cuts
 Olympics: a help and/or a distraction?

4. Last year’s Budget
 ‘Budget for Growth’
 Expression of Coalition economic policy
 Little, if any, new public expenditure
 Possibility of new incentives
 London/GSE not a key priority?
 Better starting point
 Recession less bad
 Strong private sector – across Greater SE
 Subsequent evidence suggests GSE growing
relatively faster than rest of UK

5. Incentives and financial
mechanisms
 Enterprise Zones
 Local Enterprise Partnerships/
Regional Growth Fund
 Tax Increment Financing
 Reform of local government finance
 ‘resource review’
 Business Rate Supplement, Business
Improvement Districts, Community
Infrastructure Levy etc

6. Enterprise Zones
 New EZ for Royal Docks
 Back to the Future?
 Isle of Dogs experience
 Dynamic?
 Inefficient?
 But certainly an element in Docklands’ success
 More may follow
 Which areas to be chosen? By councils?
 LEPs keep additional local tax revenue

7. LEPs and RGF
 LEPs are the government’s new
approach to the promotion of
enterprise
 Business-local government partnerships
 ‘Organic’
 To foster an “environment for business and
growth”
 To bid for resources from RGF
 Significant excess of demand over RGF supply
 Still in formative stage

8. Tax Increment Finance
 Around for a number of years
 Last week’s LG resource review terms of
reference stated the review should
consider: “how to deliver Tax Increment
Financing proposals against a context of
greater retention of business rate
revenues”
 Attempt to fund projects to allow a project
to go ahead with the expected increased
local tax payments resulting from the
development
 Development to be ‘conditional’ on the TIF scheme

9. Local government ‘resource review’
 ‘Resource’ review now under way
 TORs published in spring 2011
 Business rate retention
 New Homes Bonus
 Together, these reforms = ‘self-
sufficiency’ for some councils
 Incentives to deliver tax base growth
 Need for ‘pool’ for equalisation
 Tax competition….

10. Other, related, policies
 Business Rate Supplement
 Crossrail funding
 Could be extended?
 Business Improvement Districts
 Successful over a number of years
 Could be extended to sectors or areas?
 Community Infrastructure Levy
 Levy on developments to pay for infrastructure
 Many parts of London/GSE likely to produce a
better yield than elsewhere

11. London and the GSE– maximising
the resources available
 There are opportunities for London and its
region in all of this…
 but, the new world of incentives and tax-
base growth will be different from one of
grants etc
 Need to bring forward schemes and make
their impacts clear to national, city-wide
and local politicians
 Land values relatively powerful and growth
potential strong in London/much of GSE
 a good start…

12. What will be needed…
 Further strengthening of relationship
between councils, developers and
communities
 NB Localism Bill and planning
 Realism in the extent to which major
developments can be ‘taxed’
 Different from the ‘years of plenty’
 Public-private joint ventures?
 Certainly contributions from both
 Consistency of approach

13. Regeneration and capital
development in a cold climate
Tony Travers
London School of Economics